Posted by 2013-10-04
Title: Do you add value or lower prices?
When planning ahead to draw in the new customer and keep the clients you already have happy- do you add value to your service or product or do you slash prices to compete with "cheaper" businesses?
I think the value add approach is better. These days I would rather lose the product sale and win a services contract then try and win the product sale as margins are so thin on products it is often better to let the client buy from another supplier.
I think it depends on the product or service and whether your looking for long term gains or short term returns. Having said that; adding value has always been better than focusing on price. The challenge is in aligning the perceived value with the actual.
It is usually only the customer who wins when you try to compete on price. Starbucks continues to outperform competitors who offer coffee at a lower price by focusing on value and customer experience. Seems to work for them.
We think added value would the be way to go. Adding free shipping or limited-time bonuses would impress new customers and please current clients. Going "cheaper" may imply you've already overcharged, and may cause a problem as to where "cheaper" ends.